Disclaimer: This article provides general information under Connecticut law and does not constitute legal advice. Consult a qualified attorney before making decisions.
Detailed Answer
When co-owners of real estate or a business interest cannot agree on a buyout price, Connecticut law offers formal and informal paths to resolution.
1. Negotiation and Alternative Dispute Resolution
Start by hiring a neutral appraiser to set fair market value. If the parties still disagree, try mediation or binding arbitration. These methods save time and costs compared to court.
2. Court-Ordered Partition
If informal methods fail, any co-owner may petition the Connecticut Superior Court for partition under Connecticut General Statutes § 52-495 et seq. (Partition; persons entitled; petition).
Link: CGS § 52-495.
Partition in Kind vs. Partition by Sale
The court first examines whether it can divide (partition in kind) without destroying property value. If dividing fairly is impractical, the court orders a public sale:
- Partition in Kind: The property splits into separately owned parcels. If the land has uniform value, the court may assign unequal acreage and require a cash payment (“compensation”) from one co-owner to another (CGS § 52-507).
- Partition by Sale: The court sells the entire property at auction. After payment of liens and costs, the net proceeds divide among co-owners according to ownership shares. See CGS § 52-501.
3. Appointment of Commissioners
The court appoints three commissioners to survey the property, value each share, and report recommendations. If co-owners object to their finding, the court resolves valuation disputes.
4. Buy-Sell Agreements and Shotgun Clauses
If the co-owners’ operating agreement or partnership agreement includes a buy-sell or shotgun clause, follow its terms. These clauses let one owner set a price and give the other the option to buy out or sell at that price. Connecticut courts generally enforce these agreements.
Helpful Hints
- Obtain a professional appraisal early to set realistic expectations.
- Review any written co-ownership or operating agreement for buyout procedures.
- Consider mediation before filing for partition; it often preserves relationships.
- Prepare for court costs, commissioner fees and possible sale expenses.
- Understand that a forced sale may yield less than fair market value.